North Sea operators fined amid crackdown on risks to UK’s net-zero and energy security
UK’s regulator North Sea Transition Authority (NSTA) has fined three players – EnQuest, Equinor, and Spirit Energy – on the UK Continental Shelf (UKCS) a total of £265,000 or $322,437 in a bid to enforce the oil and gas industry’s drive to cut emissions and bolster the UK’s energy security.
While making this announcement on Monday, the NSTA explained that EnQuest and Equinor were sanctioned for exceeding flaring permits while Spirit Energy was fined for breaching production limits.
Furthermore, EnQuest has been fined £150,000 (about $182,569) for flaring an excess 262 tonnes of gas on the Magnus field between 30 November and 1 December 2021, despite knowing that it did not have the necessary consent in place, outlined the regulator.
The North Sea Transition Authority further explained that Equinor has been fined £65,000 (around $79,118) for flaring at least 348 tonnes of CO2 above the amount permitted on the Barnacle field between June and November 2020.
As Equinor uses an allocation model to measure flaring volumes for this field, whose production is mixed with oil and gas from other fields and processed on the Statfjord B platform in Norwegian waters, the exceedance of the flare consent on Barnacle did not result in an overall increase of CO2 emissions from Statfjord B during the period of the breach. While the breach of the consent was in essence an administrative breach, Equinor was still in breach of its UK flare consent for Barnacle for four months, based on the NSTA’s data.
On the other hand, Spirit has been fined £50,000 (approximately $60,875) for exceeding the maximum allowed production volumes from two fields over three years. The North Sea Transition Authority claims that Spirit’s mechanisms and management oversight were not sufficient to prevent the failure to comply with the licence conditions for the Rhyl field between 2018-20 and the Ceres field between 2019-20.
The NSTA highlighted that producing too much oil and gas can reduce the overall long-term production from a reservoir to the detriment of the UK’s security of supply, thus, it is “vital” that an operator applies for a new consent when it wants to raise production, so that, its new plan can be assessed.
Furthermore, the flaring and venting guidance, which aims to eliminate unnecessary or wasteful flaring and venting of gas, is in line with the NSTA’s strategy, including a requirement for the industry to assist the Business and Energy Secretary in meeting the UK’s net-zero target.
“This includes ensuring that flaring and venting and associated emissions should be reduced as far as reasonable in the circumstances, and there should be zero routine flaring and venting by 2030,” underscored the NSTA.
In line with this, operators like EnQuest and Equinor “must follow a clear process” to apply for consent to flare or vent gas, underlined the regulator while adding that progress has been encouraging with overall emissions from North Sea oil and gas production activities down 21.5 per cent between 2018-21.
After cooperating fully with the investigations and conducting their own internal reviews, EnQuest, Equinor and Spirit have taken steps to avoid repeats of these breaches, emphasised the regulator.
Jane de Lozey, NSTA Director of Regulation, remarked: “The NSTA is committed to supporting the UK’s energy security and lowering greenhouse gas emissions, including through the use of our robust consenting procedures, which drive down flaring and venting.
“We are encouraged by recent improvements on emissions and will take action to ensure this vital work is not undermined by companies who fail to meet their obligations.”
The regulator also pointed out that flaring on the UK Continental Shelf was at a record low last year, having been cut by 20 per cent to 25.8 billion cubic feet of gas, a reduction equivalent to the annual gas demand of 130,000 UK homes.
In September 2022, the NSTA said that the oil and gas industry was making progress on emission reduction targets.
However, more action will be required to halve emissions by 2030 as agreed in the North Sea Transition Deal, according to the regulator.